The Case for Four Percent Inflation

Laurence Ball

Central Bank Review, 2013, vol. 13, issue 2, 17-31

Abstract: Many central banks target an inflation rate near two percent. This essay argues that policymakers would do better to target four percent inflation. A four percent target would ease the constraints on monetary policy arising from the zero bound on interest rates, with the result that economic downturns would be less severe. This benefit would come at minimal cost, because four percent inflation does not harm an economy significantly.

Keywords: Inflation; Monetary policy; Inflation target (search for similar items in EconPapers)
JEL-codes: E31 E52 E58 (search for similar items in EconPapers)
Date: 2013
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Citations: View citations in EconPapers (77)

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